Using AI to Read and Review Contracts: What It Can Do and Where You Need a Lawyer
How to use AI to review business contracts systematically: key-term summaries, playbook checks, bilingual consistency and obligation tracking, and where a lawyer is needed.
Imagine a 15-person digital agency that has just won a major corporate client. Procurement sends a 28-page service agreement in English and Thai and asks for it to be signed by Friday. The agency owner has no legal team, and the lawyer they know is booked until next week. Situations like this lead many people to drop the contract into AI and ask "can I sign this?", which is the wrong question. The right question is "which clauses do I need to understand and negotiate before signing?"
This article is general information, not legal advice. Contracts of high value or risk should always be reviewed by a lawyer.
What role can AI play in contract work?
AI works well as a "first-pass reader" that helps you understand a contract faster and prepare focused questions. It reads long documents quickly, extracts key terms into a table and flags unusual clauses. But it does not know your business context, does not know what was agreed verbally, and can misinterpret the law.
Five contract tasks AI does well
1. Summarise key terms in a table
Ask it to extract the parties, term, auto-renewal, payment terms, termination, penalties, liability cap, intellectual property, confidentiality, governing law and jurisdiction, always citing the clause number so you can check the original.
2. Compare against your company playbook
A playbook is a document stating what your company can accept, such as maximum credit terms, a required liability cap, and what rights the client gets to delivered work. Have AI mark each clause green, yellow or red against the playbook. Red clauses must be negotiated or sent to a lawyer.
3. Check bilingual consistency
Some Thai-English contracts are not translated consistently. Have AI compare clause by clause and point out where meanings differ, then check whether the contract states which language prevails in a conflict.
4. Draft proposed changes and questions
Have AI draft revised wording for red clauses and a polite email of questions to the other party, for example asking to cap liability at the contract value. You decide which points to send.
5. Track obligations after signing
Many companies sign and forget. Have AI extract key dates, such as the non-renewal notice deadline, delivery dates and reporting cycles, and put them into a calendar or tracking system.
Hypothetical example: the agency that must sign by Friday
The agency owner uses a company-approved AI tool to summarise the contract into a table and compare it with a short playbook written earlier. It finds three red clauses: unlimited liability, the client owning copyright including the agency's internal tools, and auto-renewal with only 7 days' notice. The owner sends these three points with prepared questions to a lawyer for a 30-minute review, instead of having the lawyer read all 28 pages, getting advice faster and at lower cost.
AI helps you ask your lawyer sharper questions; it does not let you skip asking.
Cautions
- AI can cite laws or cases that do not exist: in Mata v. Avianca, the US District Court for the Southern District of New York fined lawyers $5,000 in June 2023 for filing a brief citing fake cases obtained from ChatGPT. Every legal reference must be checked against a real source.
- Thai law has specific details: for example the Unfair Contract Terms Act B.E. 2540 (1997) and the Electronic Transactions Act B.E. 2544 (2001), which recognises electronic signatures under the conditions in section 9. How these apply to your case should be reviewed by a lawyer.
- Confidentiality: contracts often contain non-disclosure clauses. Use only company-approved tools, and consider removing party names or figures before input.
- What is not in the document: AI does not know verbal agreements or relationship history, so you must add that context yourself.
How to get started
- Write a one-page playbook: what you can accept, what you can negotiate, and what you cannot accept.
- Create a standard prompt for contract summaries that requires clause numbers every time.
- Test it on old contracts a lawyer has already reviewed, to see if AI catches the right issues.
- Set criteria for which contract types or values must always go to a lawyer.
- Put key dates from every contract into a tracking system.
Before feeding confidential documents to AI, learn about privacy in the course Understanding personal data risks when using AI, and for employment-side contracts, read Employment contracts HR must know.